2015 (4) TMI 819 - HC - VAT and Sales Tax

Whether the renting out of tents, cutlery, furnitures and carpets by a tent house is covered by the definition of sale in Section 2(35)(IV) of the Rajasthan Value Added Tax Act, 2003 and exigible to VAT levied under the Act of 2003 - Held that - Even transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; can fall within the definition of sale. It also prescribes that transfer of property and goods could be from one person to another even for cash, deferred payment or other valuable consideration. - If the dealer like the assessee sends for installation of Pandal, shamiyanas, kanats, sofa, table and crockery through its employees for installation as per desire by its customers and later on the employees of the respondent-assessee brings back the aforesaid items, it will not come within the purview of sale, in my view, is not correct as it does not make any difference as to whether the customer carries the goods on his own for installation and brings back the same through its labourers/employees or otherwise. In my view, there is hardly any distinction in between the two and it is one and the same thing. Very thin line of conclusion has been drawn by the Tax Board and in my view under both propositions it would certainly fall within the definition of sale. Section 2(35)(iv) does not envisage a situation, that if the goods are being carried on by the customers it will come within the purview of sale or if the aforesaid items are sent by the respondent assessee to customers through its employees then it will not come within the ambit and definition of sale. The definition of sale is wide enough. It covers even goods transferred on short duration. The Honble Apex Court in the case of Agarwal Brothers (1998 (9) TMI 532 - SUPREME COURT OF INDIA) considering the case where shuttering material was provided by the dealer for use in construction of building for a limited period was held liable to sales tax as during intervening period it remained in the possession of builders, fell within the definition of sale as there was transfer of goods. - Language under the Haryana General Sales Tax vis a vis the definition under the Rajasthan VAT Act,2003 which has been quoted hereinabove is identical and therefore the judgment rendered by the Apex Court supports the contention of the counsel for the revenue - Decided in favour of Revenue.

Summary

Issues:
1. Interpretation of the definition of sale under the Rajasthan Value Added Tax Act, 2003.
2. Determining whether renting out tents, cutlery, furniture, and carpets constitutes a sale under the Act.

Analysis:

Issue 1: Interpretation of the definition of sale under the Rajasthan Value Added Tax Act, 2003:

The case involved a dispute regarding the interpretation of the definition of sale under the Rajasthan Value Added Tax Act, 2003. The respondent, engaged in the business of tent decoration, sought clarification on whether their activities fell within the purview of sale as defined in the Act. The Additional Commissioner (Law) concluded that the activities were liable to sales tax under the Act. The matter was taken to the Rajasthan Tax Board, which differentiated between scenarios where the customer carried the items themselves and when the items were sent by the assessee. The Tax Board held that if the customer carried the items, it constituted a sale, while if the items were sent by the assessee, it did not. However, the court found that there was no substantial difference between the two scenarios and that both fell within the definition of sale as per the Act.

Issue 2: Determining whether renting out tents, cutlery, furniture, and carpets constitutes a sale under the Act:

The key question raised in the petition was whether renting out tents, cutlery, furniture, and carpets by a "tent house" could be considered a sale under Section 2(35)(IV) of the Rajasthan Value Added Tax Act, 2003. The counsel for the Revenue argued that the transfer of the right to use goods for any purpose, for valuable consideration, falls within the ambit of sale as per the Act. Referring to Section 2(35)(IV), it was highlighted that even the right to use goods, whether for a specified period or not, could be considered a sale. The court analyzed the provisions of the Act and the arguments presented, emphasizing that the definition of sale under Section 2(35)(IV) was broad enough to cover the activities of the respondent, even if the goods were sent for installation by the assessee's employees.

In conclusion, the court referred to a judgment by the Hon'ble Apex Court in a similar context, where it was held that the transfer of the right to use goods for consideration constitutes a sale. Drawing parallels between the cases, the court ruled in favor of the Revenue, quashing the order of the Tax Board and determining that the renting out of tents, cutlery, furniture, and carpets by the respondent fell within the definition of sale under the Rajasthan Value Added Tax Act, 2003.